The Second Markets in Financial Instruments Directive 2014/65/EU (MiFID II) was required to come into force across all EU Member States on 3 January 2018. Some Member States however have not yet transposed MiFID II in full into their national law. As a result, on 19 July 2018, the European Commission referred Slovenia and Spain to the Court of Justice of the European Union (CJEU) for failing to adopt the necessary national measures to implement MiFID II as well as its supplementing Delegated Directive (EU) 2017/593 (Delegated Directive). This could result in serious penalties for both Member States.

In response, the Spanish government has taken action and therefore, on 8 November 2018, Spain’s referral was suspended by the European Commission for the time being.

Background

In September 2017, the Commission formally requested Member States to transpose MiFID II and its Delegated Directive. Member states that failed to do so, were again formally notified in January 2018. Nevertheless, by July 2018, Spain had only engaged in a partial transposition of the relevant rules, while Slovenia had not introduced any MiFID II implementing measure.

MiFID II

According to the Commission, MiFID II is the ‘building block’ for properly functioning securities markets across the EU. The MiFID II regime introduces stronger investor protection rules and more stringent and transparent operational requirements for trading venues and investment firms.

Without implementing measures in place, national competent authorities are not able to grant the necessary authorisations for investment activities and services regulated under MiFID II either for the first time or as updated. Additionally, the MiFID II passporting regime may not work as smoothly, if the relevant rules are not applied consistently across the EU. Therefore, failure to transpose MiFID II can cause serious detriment to investors and disrupt EU securities markets as well as the continuing work towards a EU Single Market.

Suspension of referral for Spain

Following its referral, Spain transposed the majority of the provisions of MiFID II by way of a Royal Decree Law (Real Decreto-ley 14/2018, de 28 de septiembre, por el que se modifica el texto refundido de la Ley del Mercado de Valores, aprobado por el Real Decreto Legislativo 4/2015, de 23 de octubre), which entered into force on 30 September 2018 and which was notified to the Commission on 1 October 2018. However, the majority of the provisions of the Delegated Directive have not been transposed in the Royal Decree Law and still need to be transposed. The Spanish Government is planning to transpose such missing provisions by the end of November. Therefore, the Commission suspended its referral to the CJEU, but also ‘warned’ that it may reconsider its decision if Spain fails to meet the November deadline.